1. Although Federal Employers' Liability Act (FELA) benefits are awarded under a
federal program, the benefits are not immune from state law process. As a result,
Kansas courts are not preempted from dividing benefits awarded to a spouse in a
divorce proceeding under FELA, provided the benefits qualify as marital property.

2. To the extent FELA benefits compensate an injured spouse for post-dissolution lost
earnings or loss of earning capacity, the benefits are not marital property in a divorce
proceeding. However, to the extent the benefits compensate for a diminution of the
marital estate, that is, compensation for past wages, medical expenses, and other items
incurred during the marriage, the benefits are marital property subject to division.

GREEN, J.: Rita D. Buetow appeals from the division of property in a divorce action.
On appeal, Rita argues that the trial court erred in ruling that her former husband's disability
award did not form part of the marital estate. We disagree and affirm.

Kevin W. Buetow was injured in a work-related accident while employed by Union
Pacific Railroad. Less than 2 weeks after the accident, Kevin's wife, Rita, filed for divorce.
The trial court granted a divorce and divided the marital property, but reserved ruling on
whether Rita should receive a portion of Kevin's disability award until Kevin collected the
settlement payment.

After Kevin received the lump sum disability payment, he moved for a determination
of whether the award was part of the marital estate. The trial court determined that the
disability award was not part of the marital estate because it compensated Kevin for "his
personal injury, disability, and loss which extended beyond filing for divorce."

The sole issue on appeal is whether the trial court erred in determining that the
disability award was not part of the marital estate. First, it is important to note that because
Kevin suffered a work-related injury while working for Union Pacific Railroad, the Federal
Employers' Liability Act (FELA) governs his disability award. See 45 U.S.C. § 51 et
seq.
(1994). FELA provides the exclusive remedy for a railroad employee who is injured while his
or her employer engages in interstate commerce. See Erie R.R. Co. v. Winfield, 244
U.S. 170,
61 L. Ed. 1057, 37 S. Ct. 556 (1917).

Kansas appellate courts have not previously addressed whether a disability award
distributed under FELA is an asset subject to a division in a divorce. Although FELA
benefits are awarded under a federal program, federal workers compensation awards are not
immune from state law process. For example, in Gonzalez v. Gonzalez, 689 S.W.2d
383, 386
(Mo. App. 1985), the court held that an award distributed under FELA was marital property
subject to division. Gonzalez rationalized that the Missouri courts could divide
FELA
benefits in divorce actions "[b]ecause Congress has not 'positively required by direct
enactment' in the F.E.L.A. statutes that state law relating to a division of property in a
dissolution of marriage action be preempted." 689 S.W.2d at 386. We similarly find that
Kansas courts are not preempted from dividing benefits awarded to a spouse under FELA,
provided the benefits qualify as marital property. See generally Annot., 30 A.L.R. 5th 139.

When determining whether personal injury settlements and workers compensation
benefits are marital property, courts apply two general approaches-- the mechanical and the
analytical. See Parde v. Parde, 258 Neb. 101, 108-10, 602 N.W.2d 657 (1999). A
minority of
courts apply the mechanical approach. Under this approach, personal injury awards are
categorized entirely as marital property. See 258 Neb. at 109. On the other hand, the
analytical approach evaluates the nature and underlying reasons for the compensation. "'The
core of the analytic approach is its recognition that the classification of the award depends
upon the nature of the underlying loss.' [Citation omitted.]" 258 Neb. at 109; see generally
Annot., 30 A.L.R. 5th 139.

The Kansas Court of Appeals applied the analytical approach in In re Marriage of
Powell, 13 Kan. App. 2d 174, 766 P.2d 827 (1988), rev. denied 244 Kan. 737
(1989). In that
case, the trial court awarded the wife one-half of the couple's cash assets, which included
money received from the husband's personal injury settlement. The Powell court held
that a
personal injury settlement is marital property. 13 Kan. App. 2d at 180. In so holding, the
court analyzed the nature of the underlying loss and viewed the personal injury settlement as
a settlement for the entire family. Powell further rationalized that a personal injury
settlement not only compensates the individual for personal expenses, but also provides
maintenance for the family of the injured spouse. As a result, Powell held that the
wife was
entitled to a portion of the husband's personal injury settlement. 13 Kan. App. 2d at 180.

The analytical approach has also been adopted by the Colorado Court of Appeals in
In re Marriage of Smith, 817 P.2d 641, 644 (Colo. App. 1991). Although a previous
Colorado
decision classified personal injury settlements as marital assets, the Smith court held
that
workers compensation permanent disability benefits are not marital assets. The court
rationalized:

"[The Colorado Workers' Compensation Act] reflects a legislative intent to ensure that
workers'
compensation benefits are available as a wage substitute to the injured employee. This legislative
policy
would be contravened by a judicial holding that workers' compensation awards are marital
property to
be divided upon dissolution irrespective of whether the award compensates for an injured spouse's
diminished earning capacity during marriage or after dissolution.

. . . .

"Accordingly, the dispositive question in determining whether workers'
compensation
benefits are marital property is the extent to which the award compensates for loss of earning
capacity
and medical expenses incurred during marriage. To the extent that an award compensates the
spouse
for post-dissolution loss of earning capacity, it is not marital property even if the compensable
injury
occurred during the marriage." 817 P.2d at 644.

Smith concluded that the husband's pending claim for permanent disability
benefits was not a
marital asset. 817 P.2d at 644.

Most recently, the analytical approach was adopted by the Nebraska Supreme Court
in Parde. The Parde court addressed whether the unpaid portion of the
husband's FELA
settlement was marital property. The court relied on a four-factor test previously articulated
in a Nebraska Court of Appeals' decision. In determining whether portions of an award are
marital property or separate property, Nebraska courts now consider

"'(1) the purpose of the award, e.g., whether it was made for lost earnings, loss of future
earning
capacity, or some other purpose; (2) the time period of any diminished earning potential or
disability;
(3) the nature and date of the underlying injury; and (4) the terms of the award.'" 258 Neb. at 107
(quoting Gibson-Voss v. Voss, 4 Neb. App. 236, 242, 541 N.W.2d 74 [1995]).

The Parde court then noted that Nebraska, like Kansas, is an equitable
distribution state and
"[i]n equity, there is rarely one tidy answer that fits every size and type of problem that
courts are called upon to resolve." 258 Neb. at 108. Accordingly, Parde concluded
that "a
principled approach to this issue should be consistent with the basic policy rule that the
marital estate should include only property created by the marital partnership." 258 Neb. at
108.

In summary, to the extent that FELA benefits compensate an injured spouse for
post-dissolution lost earnings or loss of earning capacity, the benefits are not marital property.
However, to the extent the benefits compensate for a diminution of the marital estate, that is,
compensation for past wages, medical expenses, and other items incurred during the marriage,
the benefits are marital property subject to division. Because the trial court determined that
Kevin's FELA benefits compensated him for "personal injury, disability, and loss which
extended beyond filing for divorce," the trial court properly excluded the disability award
from the marital estate.